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Please use this identifier to cite or link to this item: http://hdl.handle.net/2108/360

Title: Credit rationing and the financial structure of Italian small and medium enterprises
Authors: Alfò, Marco
Trovato, Giovanni
Keywords: public subsidies
credit rationing
asymmetric information
Markov regression models
Issue Date: Mar-2006
Publisher: CEIS
Series/Report no.: CEIS Tor Vergata Research Paper; 80
Abstract: Our aim is to analyze the effect of public subsidies on the development path of Italian small and medium enterprises (SMEs). Public subsidies to SMEs have been often used with the aim of favoring economic growth in less developed regions. The main theoretical arguments justifying this intervention are related to the idea that public subsidies can solve lack-of-capital problems deriving from asymmetric information. According to Stiglitz and Weiss (1981), public subsidies to rationed firms can reduce the informational gap, leading subsidized firms to reduce their financial constraints and to increase their investment levels. Results obtained modelling leverage, performance and investment behaviour in a panel of around 1,900 enterprises over the years 1989 to 1994 seem to confirm the working hypotheses. However, they can not be considered as conclusive and further research is needed in this context.
URI: http://ssrn.com/abstract=897503
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